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A Bayesian Subjective Poverty Line, One Dollar a Day Revisited

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    Abstract

    This paper provides a new estimation of an international poverty line based on a Bayesian approach. We found that the official poverty lines of the poorest countries are related to the countries’ mean consumption level. This new philosophy is to be compared to the previous assumptions made by the World Bank in favour of an absolute poverty line. We propose a new international poverty line at $1.48 per day (2005 PPP) based on a reference group consumption level. This figure is much higher than that proposed by the World Bank ($1.25 in 2005 PPP), but still within a reasonable confidence interval. By this standard, there are more than 1.7 billion people living in poverty.

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    File URL: http://www.amse-aixmarseille.fr/sites/default/files/_dt/2012/wp_2013_-_nr_02.pdf
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    Bibliographic Info

    Paper provided by Aix-Marseille School of Economics, Marseille, France in its series AMSE Working Papers with number 1302.

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    Length: 24 pages
    Date of creation: 05 Feb 2013
    Date of revision: 05 Feb 2013
    Handle: RePEc:aim:wpaimx:1302

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    Web page: http://www.amse-aixmarseille.fr/en
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    Keywords: Poverty line; Bayesian inference.;

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    1. Bruce E. Hansen, 1996. "Sample Splitting and Threshold Estimation," Boston College Working Papers in Economics 319., Boston College Department of Economics, revised 12 May 1998.
    2. Van Praag, Bernard, 1971. "The welfare function of income in Belgium: An empirical investigation," European Economic Review, Elsevier, vol. 11(3), pages 337-369.
    3. Ravallion, Martin & Datt, Gaurav & van de Walle, Dominique, 1991. "Quantifying Absolute Poverty in the Developing World," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(4), pages 345-61, December.
    4. Van den Bosch, Karel, et al, 1993. "A Comparison of Poverty in Seven European Countries and Regions Using Subjective and Relative Measures," Journal of Population Economics, Springer, vol. 6(3), pages 235-59.
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